Millions of Big Earners Should Expect Higher Payroll Taxes in ‘17

shutterstock_260489408

 

For those who have been excited to see their tax bill go down under a Trump administration, there might be cause for some concern, especially for some of the country’s highest earners. That’s because for the millions of workers who pass a certain threshold a tax hike is coming. So why the increase?

First, this change was in place before President Trump won the election in November. This scheduled change comes in the form of an adjustment to Social Security payroll taxes, and it will affect a lot of high earners. Over the past several years, workers have paid a 6.2 percent payroll tax to Social Security, which is matched by employers and automatically deducted from their paychecks.

That number will remain the same in 2017, but there is a catch. It used to be that workers only paid that amount on the first $118,500 they earned for the year. This year, that threshold increases to $127,200. That will amount to hundreds of dollars for anyone affected. Meantime, for self-employment workers, the news is even worse because they are forced to pay the full Social Security tax themselves without splitting the cost with an employer.

So how many people are we talking about? Anyone that makes less than $118,500 won’t be affected but the estimated 12 million workers that make more than that will see a hit, which amounts to one of the biggest changes in the tax code in nearly 30 years.

http://time.com/money/4628475/payroll-taxes-social-security-2017/

Posted in
Where Can You Find the World’s Best Tax Havens?

Where Can You Find the World’s Best Tax Havens?

Where Can You Find the World’s Best Tax Havens? What’s your next vacation location: the Caribbean Tahiti, Bermuda, Belize, the Virgin Islands, or perhaps the Cayman Islands? These are all great choices and many of the world’s wealthiest individuals not only get to travel to these exotic locations on a regular basis, but many of…

Enjoy Them While They Last: End of Bush Tax Cuts Could Throw U.S. into Deeper Recession

Enjoy Them While They Last: End of Bush Tax Cuts Could Throw U.S. into Deeper Recession

Enjoy Them While They Last: End of Bush Tax Cuts Could Throw U.S. into  Deeper Recession A few Senate Democrats recently made noise over ending the Bush Tax Cuts in January 2011 given the country’s economic prospects. Although many people have predicted that the end of the Bush Tax Cuts is a foregone conclusion, a…

Trusts for Children

Trusts for Children

Trusts for Children There is a new message that the very wealthy are delivering to their children, a message heard more and more often. And it is a message that could just as well be delivered to the children of parents with somewhat more humble accumulations of assets. To state it bluntly, the message is:…

Estate Planning for Highly Appreciated Stocks

Estate Planning for Highly Appreciated Stocks

Estate Planning for Highly Appreciated Stocks Despite the market reversals of 2000-2001, large unrealized gains still reside in many longheld stock portfolios built up during the record 1982-1999 expansion. How do such assets fit into an estate plan? Advantages over estate transfers Many estate plans include a program of regular gifts. From a tax perspective,…